If Apple is able to drive adoption of its rumored iTunes-backed mobile payment system among wealthy consumers at the same pace as similar systems in the developing world, it could be one of the company's most important — and profitable — strategic moves.

The rise of mobile money accounts — deposit and payment facilities that center around a mobile phone — in the developing world may best be described as "meteoric." As of last June, nearly 250 mobile money providers in 89 countries around the world counted some 60 million active users.

Nine countries in Africa have more mobile money accounts than bank accounts; Tanzania alone accounted for almost 100 million mobile money transactions worth nearly $2 billion last December."I feel like a caveman who's just been handed a Bic lighter" — Businessweek's Charles Graber on paying with a mobile phone in Kenya
These statistics, compiled by Leo Mirani of Quartz, point to the collective desire of a huge portion of the world's population to move beyond traditional payment methods and conduct real-world transactions with a mobile device. With 800 million credit card-enabled accounts in iTunes and a secure authentication system in Touch ID, Apple has the makings of a formidable entry.

Apple's target market would be different, of course. Many African mobile money users bring home less than $300 per month, making them unlikely targets for even the least-expensive iPhone, and would otherwise be making payments using cash.

The iPhone maker's customers, meanwhile, are generally wealthy and already used to relying on electronic payments in the form of credit cards and web payment services like PayPal. Still, the processes are relatively insecure and often clunky, making the worldwide payments ecosystem ripe for disruption.

Apple Chief Executive Tim Cook has publicly stated his company's interest in the area, telling reporters that "the mobile payments area in general is one we've been intrigued with" and that "it was one of the thoughts behind Touch ID" during the company's quarterly results conference call in January.

Many industry observers believe that Apple's entry could come as soon as this fall with the next-generation iPhone. The so-called "iPhone 6" has been rumored to include near-field communications technology, a short-range wireless data transfer standard that powers nearly every modern contactless payments system and has shown few worthwhile use cases outside of that arena.

Such a system could make Apple the most popular mobile money account provider in the world nearly from day one, thanks to the company's sheer size — Apple sells more than 30 million iPhones each quarter, and almost everyone who buys an iPhone ties it to a credit card-backed iTunes account.

In addition to short-term gains, the stage would also be set for long-term growth. As consumers in developing nations — already accustomed to handset-based payments — grow wealthier and look to more powerful devices, an "iPay" system could be a powerful differentiator from rivals like Android and Windows Phone.

I think the key issue here is how much Banks (and therefore cheques and credit cards) are mistrusted in the 2nd and 3rd world countries.

in a related business note, the gov't lotteries in Central and South America almost all run via Mobile Payments exclusively.

This is why an Apple can provide effective (better than current) Proof of Identity via a TouchID enabled phone, for 30% of the 'transaction fee'. Android phones may be able to do it as well, but if there are 100's of platforms, it may be hard to support, compared to one implementation on one architecture in iOS.

That's an interesting article. I think the developed world will prefer credit cards for the foreseeable future. They are safer, accepted in more countries, allow for returned merchandise, have fraud protection, provide automatic short term loans, and the CC company can also serve as an arbitrator if things don't work out. For business credit cards are the only way to go. One thing I do like about the Kenya example is that it allows payments between private individuals which credit cards don't usually allow. PayPal is also a nice system, which works for individuals and small businesses.

This is why an Apple can provide effective (better than current) Proof of Identity via a TouchID enabled phone, for 30% of the 'transaction fee'. Android phones may be able to do it as well, but if there are 100's of platforms, it may be hard to support, compared to one implementation on one architecture in iOS.

They won't take 30%. If they can pull in 1% they will be rolling in the money.

I think in the short term Apple could just create a link between your iPhone and your iWatch (a one-time process when you initially purchase a new iPhone or iWatch), then have the iPhone's TouchID act to unlock both the phone and the iWatch. Here is how I think that would work. Your iWatch has apps on it that connect to your iPhone and use its cellular or wifi connection to provide data to the iWatch apps. For most iWatch apps, this just happens automatically. But for an iWatch app that transmits confidential data, like when you use the iWatch to pay for something or when you use the iWatch to gain access to a protected area of your workplace, for example, then the iWatch needs to be authenticated as being on YOUR wrist and not some other person's wrist. and the way that happens is that at some point after you strap it on, you use your iPhone to authenticate it. Perhaps it even prompts you to do so at the time you strap it on (by asking you to touch the TouchId on your iPhone). you can ignore this request and go about your business, but you will need to authenticate if you subsequently take some action with the iWatch that requires authentication. Once you have authenticated the iWatch, it could remain authenticated until you take it off, at which time the current authentication would expire. So you use the iPhone to authenticate the watch once its on your wrist, then use the watch to authenticate you to security and payment systems. No TouchId needs to be built into the iWatch. Cool, eh?

Curious- why is mobile payment so popular in the developing countries and essentially non-existent in the developed nations?

It couldn't be strictly because of the internet cafes, could it?

It's called "mobile payment" because you are not sitting at a computer.

All those countries have millions of dollars they need to transfer out of the country that belonged to dead people that have no descendants. I've had dozens of lawyers from Nigeria alone want me to help them. It's tragic, I tell you!

If Apple is able to drive adoption of its rumored iTunes-backed mobile payment system among wealthy consumers at the same pace as similar systems in the developing world, it could be one of the company's most important -- and profitable -- strategic moves.

The rise of mobile money accounts -- deposit and payment facilities that center around a mobile phone -- in the developing world may best be described as "meteoric." As of last June, nearly 250 mobile money providers in 89 countries around the world counted some 60 million active users.

Apple's target market would be different, of course. Many African mobile money users bring home less than $300 per month, making them unlikely targets for even the least-expensive iPhone, and would otherwise be making payments using cash.

Cash...but also goats, lots of goats, and chickens

Quote:

The iPhone maker's customers, meanwhile, are generally wealthy and already used to relying on electronic payments in the form of credit cards and web payment services like PayPal. Still, the processes are relatively insecure and often clunky, making the worldwide payments ecosystem ripe for disruption.

Many industry observers believe that Apple's entry could come as soon as this fall with the next-generation iPhone. The so-called "iPhone 6" has been rumored to include near-field communications technology, a short-range wireless data transfer standard that powers nearly every modern contactless payments system and has shown few worthwhile use cases outside of that arena.

The near-field communications will happen with Apple when pigs fly. Apple will introduce their own system that they will totally control and it will come to dominate.

Quote:

Such a system could make Apple the most popular mobile money account provider in the world nearly from day one, thanks to the company's sheer size -- Apple sells more than 30 million iPhones each quarter, and almost everyone who buys an iPhone ties it to a credit card-backed iTunes account.

In addition to short-term gains, the stage would also be set for long-term growth. As consumers in developing nations -- already accustomed to handset-based payments -- grow wealthier and look to more powerful devices, an "iPay" system could be a powerful differentiator from rivals like Android and Windows Phone.

And one phone will rule them all... by September Apple will have an established base of about 150 million iTouch enabled iPhones. I would expect, if one includes the new iPads with iTouch, that a year later that number to be more then doubled... perhaps as much as 400 million installed base of iPhones and iPads with many of those in enterprise environments.

This is why an Apple can provide effective (better than current) Proof of Identity via a TouchID enabled phone, for 30% of the 'transaction fee'. Android phones may be able to do it as well, but if there are 100's of platforms, it may be hard to support, compared to one implementation on one architecture in iOS.

They won't take 30%. If they can pull in 1% they will be rolling in the money.

I like the idea of Apple authorizing the transaction against your card on file at iTunes. The hurdle is to how to gain widespread acceptance and get custom Touch ID compatible payment terminals in businesses. Accepting credit cards costs the seller 2-3% when the physical card is swiped or as high as 8-9% in circumstances where the card might be from a different country and charged without the card being present. That processing fee is paid by the business making the sale, to their merchant gateway company. Somewhere in there Apple would need to get a cut. But technically, Apple is just another company accepting credit cards, not a bank.